Amazon’s Dynamic Pricing

ByHoma Zaryouni ·

14 August 2014

The graph above from L2’s Intelligence Report: Amazon shows pricing fluctuations for four Olay items. Starting at a discount on June 25, prices of Olay daily facial clothes jumped back up to $10 for a few days in July. Price for the foaming cleanser dropped on July 11 and never recovered.

The changes are not an anomaly. Amazon adjusts prices 2.5 million times a day to ensure it has the most competitive prices in its own inventory listings. The site’s price crawler is continuously adjusting prices of non-Amazon inventory listed on its Merchants site.

In some cases, price swings can be even more drastic. For example, a four-pack of 8.9-ounce Cheerios ranged rom $7.22 to $19.98 in a two-week period. In addition to price adjustments, Amazon encourages retailers to list at low prices to win the “Buy Box”, which lists the lowest third-party retailer. Ninety percent of consumers purchase items from the Buy Box without looking through other third-party listings.